IEA wants Government to introduce voluntary road pricing

Research carried out by the Institute of Economic Affairs shows that the introduction of a voluntary pricing mechanism for road usage would have a sizeable impact on traffic and congestion.

The report, entitled Moving the Road Sector into the Market Economy, has been written by leading transport economist Gabriel Roth and highlights important lessons for UK policy makers in tackling chronic road congestion through the introduction of road pricing.

The research calls for customers, not governments, to determine the amounts and locations of infrastructure expansion.

Findings include:

90% of passenger traffic and over 60% of freight movement is by road, compared to 8% and 10% by rail, respectively. Despite this, government spending on roads is just a third higher than on the railways.

Britain’s roads have become the most crowded in Europe, with congestion costing around £20 billion a year in the UK.

Road development has been hamstrung by the government

Road users are not getting the benefits of competition. Governments are all too easily swayed by political considerations, which do not take into account what is best for drivers.

Despite a shortage of roads, suppliers are disincentivised from providing additional capacity because investment is constrained by government policy.

The research recommends the following:

Private providers should be allowed to enter the market and compete on equal terms with government providers. Prices determined by supply and demand are crucial to allocate scarce road space and signal shortages, alleviating traffic congestion for road-users.

Voluntary mileage-based tolls

Drivers who opt to use toll roads could receive an exemption from vehicle taxes. A voluntary system such as this could test road-users’ reactions and allow private firms to test out equipment and billing technology. The current operation of mobile phone networks could be replicated in achieving a system for road pricing.

Tolled express lanes

Private road providers could build these where government roads are congested. If just 20% of drivers opted to use these, it would have a substantial impact on congestion. Many customers would be prepared to obtain quicker travel by paying more to drive on commercially provided roads.

Commenting on the research, Dr Richard Wellings, head of transport at the Institute of Economic Affairs, said: “For too long motorists have been used as a cash cow by successive governments which have received vast sums in fuel duty but have invested relatively small amounts in the road network. Moving the road sector into the market economy would mean higher investment, lower taxes, less congestion and a much better overall deal for road users.”

Mark Littlewood, director general at the Institute of Economic Affairs, added:

“Rather than taxing motorists so heavily, we should encourage moves to a pay-as-you-go system of pricing. Imagine if, instead of paying directly for each purchase, we all paid for annual season tickets to our local supermarket and could then just help ourselves to whatever we wanted. The result would be gross inefficiency and even chaos. To keep our traffic flowing and to encourage the appropriate expansion of our transport network, we need road pricing to begin to replace upfront, one off taxes.”